Netflix has been the movie and TV streaming service to beat for years, but the company continues to explore potential avenues for expansion. Bloomberg reports that Netflix has been offering to partner with cable companies for two years, but has yet to make much headway. Two European cable companies, Virgin Media in the U.K. and Com Hem AB in Sweden, have both decided to include Netflix as an app on TiVo set-top boxes, but U.S. companies have yet to accept the partnership. More →
It may take a while but it seems that the pay TV business is gradually going the way of dial-up Internet. Business Insider points us to the latest numbers from research firm SNL Kagan showing that cable providers lost 1.8 million pay TV subscribers in the second quarter of 2013. SNL Kagan’s research is just the latest evidence that Americans are increasingly becoming unwilling to pay money for television services when they can instead subscribe to Netflix and Hulu and watch shows over their broadband connections. To get some perspective on this, consider that 1 million cable TV subscribers ditched their pay TV services throughout all of 2011 — the cable industry is now losing almost twice that many over the span of just a quarter.
This may be surprising, but most Americans really don’t like their cable companies. CNET reports that research firm Temkin Group has just released a massive customer satisfaction survey of around 10,000 American consumers and has found that pay TV companies account for the six of the seven worst-rated companies in the United States. Charter Communications, Time Warner Cable, Cox Communications and Cablevision all had customer satisfaction ratings of below 30% while Comcast and Verizon’s pay TV services both had ratings of exactly 30%. The Temkin survey follows a survey earlier this year from the American Consumer Satisfaction Index that showed American ISPs, led by cable providers Comcast and Time Warner Cable, had the lowest customer satisfaction of any industry in the United States, including airlines and health insurance companies.
Yes, cable companies are still making money hand-over-fist on their pay television services but they’re doing it by squeezing more revenues out of a shrinking customer base. A new article from USA Today suggests that cable companies may not be able to keep this game up forever, however, and cites a “perfect storm of online video, new devices, rising prices and programming blackouts” that is “eroding traditional pay-TV providers’ grip on the living room.” USA Today reports that a recent survey from The Diffusion Group research firm shows that 7% of cable TV subscribers say they’re “highly inclined” to cancel their service over the next six months. More →
Believe it or not, cable companies are actually trying to think of ways to lower their customers’ bills. The Wall Street Journal reports that cable providers have started listening to customer complaints that their cable bills are being driven up by heavily subsidized sports stations that they never watch. The reasons cable providers are considering abandoning sports networks are fairly obvious: As the Journal notes, “sports channels such as ESPN and regional sports networks account for 19.5% of fees paid by cable and satellite operators,” despite the fact that the audience for sports stations amounts “to about 4% or less of households on average.” With cord cutting becoming an increasingly prevalent phenomenon, it’s not surprising that cable companies are trying to get more creative in their ways to retain pay TV customers and sports stations look like a good early candidate for the chopping block.
If there’s one industry that needs less competition, it’s clearly the cable industry. The Wall Street Journal reports that Liberty Media CEO John Malone and Charter Communications CEO Tom Rutledge are now preaching “the gospel of consolidation” to their fellow cable executives as they push for the cable industry to become an outright duopoly. Rutledge tells the Journal that he sees the cable industry eventually boiling down to “two major players” that will most likely be Comcast and Time Warner Cable. The Journal reports that Rutledge sees further consolidation as important to the cable industry because it “would help cable companies control costs, giving them more leverage over media companies that supply TV programming, and would put them on stronger footing to invest in new technologies.”
Cash-strapped Americans looking to save some money on their monthly bills are increasingly ditching pay television and relying on free over-the-air television instead. GigaOM points us to a new study from GfK Media & Entertainment showing that 19.3% of all American households now rely on free over-the-air broadcasts as their primary source for television, which translates to around 22.4 million households encompassing 59.7 million viewers. As GigaOM reports, this marks a significant increase in cord cutting since 2010, when just 14% of American households relied on over-the-air broadcasts. The growth in over-the-air-only households is strongest among “younger households, lower-income families and minorities,” GigaOM notes.
Cord cutting is a real phenomenon in terms of both paid television services and home broadband Internet services. But cable companies aren’t scared just yet because they figure that most consumers will rely on them for one or the other — in other words, they figure that someone who cuts the cord on their pay TV service will still want to have a home broadband connection and vice versa. AllThingsD reports on some new research conducted by analyst Craig Moffett showing that “cord-cutters who are dropping their cable TV subscriptions in favor of the Internet still need to get the Internet, and they’re probably getting that from the cable guys,” who in turn benefit because broadband service is a “strong, high-margin business.” More →
Why bother paying for wired Internet if you can get by on your mobile data plan and free Wi-Fi hotspots? The Wall Street Journal reports that consumer surveys show that “around 1% of U.S. households stopped paying for home Internet subscriptions and relied on wireless access instead” last year while just 0.4% did the same for cable television services. In the place of expensive home wired Internet services, the Journal says that these broadband cord cutters are “taking advantage of the proliferation of Wi-Fi hot spots and fast new wireless networks that have made Web connections on smartphones and tablets ubiquitous,” a strategy that likely only works for users who don’t consume a lot of data since both Verizon and AT&T both enforce data caps on their LTE services. More →
Yes, the major cable companies are losing paid television subscribers and yes, they have stunningly low customer satisfaction ratings. But as The Atlantic’s Derek Thompson ably explains, they aren’t going anywhere because they’re still making money hand over fist providing home broadband connections to tens of millions of households. Essentially, cable companies have been losing TV subscribers since the 1990s but have more than made up for this lost revenue by increasing their total number of Internet subscribers and squeezing more monthly revenue out customers “both by charging more for television and by getting households to buy more than just TV,” Thompson writes. More →
ABC isn’t taking kindly to Hulu subscribers who are watching its shows online instead of paying for monthly cable services. The New York Times reports that ABC, which is owned by Walt Disney, has decided to yank newer episodes of its shows off both the free version of Hulu and its own homepage and will instead put them on its mobile app that is only accessible to cable subscribers. The network says that it’s created its own in-house streaming app to better adapt to customer preferences by giving users access to its content on all their portable devices. ABC plans to roll out the app in six different cities over the summer.
Are you fed up with paying an $80 cable bill every month for dozens of channels that you never even watch? Not to worry, says National Cable and Telecommunications Association chief Michael Powell: You’re actually being given “unparalleled choice” in your programming. Variety reports that Powell, speaking on Tuesday at a Senate subcommittee meeting to discuss the benefits of “a la carte” cable programming, said that it’s a “very serious question mark whether consumers would have lower bills or cheaper service as a result of a la carte” because consumers may end up having to pay the same amount for fewer channels. Powell also said that it would be a mistake to make significant revisions to the 1992 Cable Act because it “could even be counterproductive by introducing uncertainty and displacing or skewing the marketplace rivalries” that offer “unparalleled choice” to cable subscribers. More →
How much do consumers dislike cable providers’ bundling practices? So much that even Time Warner Cable’s CEO has started to publicly fret about a backlash. Republican Senator John McCain is determined to do something about overly expensive cable bundles, however, and AllThingsD reports that he’s pushing legislation that would “force pay TV operators to break up the programming bundles, by offering channels in smaller groups or on an individual basis.” While this sounds good at first, AllThingsD points out that it may not do much to lower consumers’ monthly bills since popular cable stations such as ESPN are subsidized by less popular stations. Thus, if cable providers are forced to offer channels individually then ESPN could charge around $20 a month for a standalone subscription.